Flotek Industries’ operating cash flows
Flotek Industries’ (FTK) cash from operating activities (or CFO) remained negative in 2Q17, continuing with a negative cash flow trend in 1Q17. FTK’s CFO was -$4.7 million in 2Q17. Despite an increase in FTK’s revenues in the past one year until 2Q17, poor working capital management led to negative CFO. In this article, we’ll analyze how Flotek Industries’ free cash flows (or FCF) were affected given its capex.
Flotek Industries’ free cash flow
FTK’s capital expenditure (or capex) fell 41% in 2Q17 over 2Q16. Despite lower capex, negative CFO led to negative FCF in 2Q17. In 2Q17, FTK’s FCF was -$7.3 million compared to -$1.2 million FCF in 2Q16. The company’s FCF was negative in six out of the past 13 quarters.
Free cash flow comparison with peers
Halliburton’s (HAL) 2Q17 FCF was -$137 million. Weatherford International’s (WFT) 2Q17 FCF was -$111 million, while TechnipFMC’s (FTI) 2Q17 FCF was $87 million. Flotek Industries makes up 0.10% of the iShares Micro-Cap ETF (IWC). Year-to-date, IWC has risen 1% compared to the 35% fall in FTK during the period. Year-to-date, the SPX-INDEX rose 11%.
Flotek Industries’ 2017 capex plan
Flotek Industries plans to spend between $9 million and $12 million on capex in 2017. This is a reduction from a planned capex range of $10 million to $14 million disclosed earlier in FTK’s 1Q17 10-Q. FTK’s capex totaled $14 million in 2016. Also, FTK’s capex is subject to a maximum limit of $20 million in 2017, according to the credit facility agreement with PNC Bank, FTK’s primary lender.
Learn more about the OFS industry in Market Realist’s The Oilfield Equipment and Services Industry: A Primer.